The Commission Revenue Spiral

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The Commission Revenue Spiral

I received an email today about the channel strategy for 2016 for Windstream: WIND is NOT paying agents for any new order under $1500. I wrote about this when I first heard in October. No idea how this will work out, but train wreck comes to mind.

Windstream as a whole has had some much change - acquisitions, people, spin-offs - that I imagine there are no silly ideas in the conference room.

When you talk to channel partners about telecom channel programs, there are few bright spots. Some telcos are so difficult to work with that after one try, you will never go back. Other CLECs, you learn what they can deliver on - and what is vaporware. Right now, it is more vaporware than service delivery. You would think after almost 20 years, telcos could deliver network and voice. No wonder VARs and MSPs don't want to sell this stuff!

When you think about this -- go ahead! Think about it for a couple of minutes, I will wait... The channel and the telcos face the same challenge: declining pricing means less revenue!!!

We - direct and indirect - have to sell more and more to meet quota. Translate that to mean sales have to get more transactional. Not something you want when you want higher ARPU, but to make quota, salespeople and agents will sell whatever they can to get paid. That will mean more transactional sales. Stay with me for a minute.

You have a $3000 quota per month. You can sell three (3) 100MB DIA circuits and meet quota with minimal effort - or you can try to sell a converged network or a UC&C platform for $3K that will take weeks to close. (And how many of those projects have to be in your funnel to close 1? And how much time do they suck up? A lot.)

Now that same $3000 is only going to produce about $450 per month in commission.

There will be more channel conflict because directs won't want to let any deal go. Deal registration is going to become a requirement.

What is needed? Telcos have to take the friction out of sales and delivery. I just don't think they can. (Do you?)

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I don't see this working out well for anyone. Too much debt. Declining or flat revenue. Too many mergers with half-assed integration. No spend on IT infrastructure to bring BSS and OSS current. Lack of domain knowledge from massive layoffs. Talent problem because of massive layoffs and the Nepotism. Absence of innovation. But, hey, on the bright side, it has been like this for years and will likely continue in its trajectory. Even with cable kicking their asses, the telco C-Suite can't wake up.

Meanwhile, all the VoIP players are trying to disrupt telco. However, it all comes back to the PSTN. Most people still have to connect to the old phone network for call completion -- especially for rural call completion. Hard to disrupt something -- even for Microsoft or Google -- when at the end of the day, the business you are disrupting is operated by incumbent.

The biggest disruption was the iPhone and Ma Bell helped launch that....

And even the cellular world is as complicated as the wireline world. Even without unions to blame, the telcos still manage to make everything so freaking complicated, which is their primary problem.

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